Court Decision May Require Many Employers To Begin Disclosing Pay Data
A recent federal court decision carries potentially important implications for large employers and federal contractors that are required to submit annual forms (known as "EEO-1 forms") to the Equal Employment Opportunity Commission ("EEOC") regarding their workforces.
On March 4, 2019, the U.S. District Court for the District of Columbia held that the U.S. Office of Management and Budget ("OMB") had acted improperly in blocking the EEOC from issuing a revised EEO-1 form that would require covered employers to begin providing detailed pay data as part of their annual reports. While the court's order is expected to be appealed, and may be put on hold until an appeal has been decided, the decision reopens the possibility that employers may soon need to start including such information in their EEO-1 forms.
The main federal employment discrimination statute, Title VII of the Civil Rights Act of 1964, requires employers to keep and produce records "relevant to the determination of whether unlawful employment practices have been or are being committed." As part of this requirement, since 1966, the EEOC has required employers of over 100 employees and most federal contractors to file annual reports, through EEO-1 forms, with detailed employee demographic information. Employers subject to this requirement generally submit their EEO-1 forms in March of each year.
Citing its need to enforce equal pay laws, in 2016 the EEOC asked the OMB for authority to include additional questions in the EEO-1 form, detailing employees' compensation and hours worked. The OMB granted the EEOC's request later that year. The EEOC planned to begin using the revised EEO-1 forms for the FY 2017 collection cycle, with the first batch of new reports due from employers by March 2018.
In August 2017, however, the OMB - now under the Trump Administration - abruptly ordered the EEOC to stay its planned use of the new EEO-1 form. In its stay order, the OMB cited the EEOC's failure to seek public comment on certain data file specifications that the EEOC subsequently had announced would apply to employers' pay data submissions. The OMB also criticized the EEOC for failing to account for those data specifications in assessing the burden that the updated reporting requirements would cause for employers.
District Court's Decision
Subsequently, in November 2017, various advocacy groups (including the National Women's Law Center) filed suit against the OMB in federal district court in Washington, D.C., arguing that the OMB had exceeded its statutory authority in revoking the EEOC's authorization to issue the revised EEO-1 form.
In its decision last week, National Women's Law Center v. Office of Management and Budget, No. 17-cv-2458 (D.D.C. Mar. 4, 2019), the district court agreed with the plaintiffs' position, finding that the OMB's decision to stay the new EEO-1 form lacked good cause or a "reasoned explanation." The court also held that the proper remedy was to immediately vacate the OMB's stay and reinstate the agency's previous approval of the revised EEO-1 form.
In issuing its order, the court rejected the OMB's argument that permitting the EEOC to implement the new EEO-1 form could "upset the current expectation of filers, who may not be aware of this litigation nor its potential impact on their obligation" regarding EEO-1 reporting. The court reasoned that employers filing EEO-1 forms were, or should have been, aware that the OMB's stay was temporary and could be withdrawn at any time.
Implications For Employers
The court's decision has created uncertainty for large employers and government contractors as to their EEO-1 filing obligations. For many employers, EEO-1 data collection efforts for FY 2018 are already well underway, in anticipation of the upcoming submission deadline of May 31, 2019 (previously postponed from March 2019 due to the partial government shutdown). While the OMB is expected to appeal from the decision, and the court's order may well be stayed pending the outcome of that appeal, as of now, no such stay has been put in place.
Given the possibility of a stay, however, as well as the fast-approaching May 31, 2019 filing deadline, it seems possible that the EEOC will decide not to require employers to begin using the revised EEO-1 form as part of the current data collection and reporting cycle. Indeed, as of this writing, the EEOC's website still refers to the prior version of the EEO-1 form. The 2018 EEO-1 survey officially opens online on March 18, 2019.
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Employers that file annual EEO-1 forms would be wise to pay close attention to further developments in this area. In the meantime, employers with questions about their EEO-1 reporting requirements are encouraged to contact one of our experienced employment attorneys.